Deferred bonus payments cause earnings jump

Julian Harris
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WORKERS’ earnings jumped by 3.3 per cent in April compared to a year earlier, seemingly due to bonus payments being put back a month to take advantage of a cut in the top rate of tax.

Bonus payments soared by 49 per cent in the month, compared to April 2012. In March, bonuses were down 7.9 per cent annualised.

“The different timing of the bonus payments this year may have been driven by the 5p cut in the 50p income tax rate, which took place between these latest two months,” said Victoria Clarke, an economist at Investec.

The figures, reported by the Office for National Statistics (ONS) yesterday, showed that the spike was especially sharp in financial and business services, where bonuses were up 64.4 per cent.

Yet even in the public sector, excluding financial services, bonuses were up 16.3 per cent.

Despite the sudden uptick, underlying pay growth across the economy remains subdued.

Average pay, including bonuses, were up just 1.3 per cent in the three months to April, compared to the year-ago period.